A C A M S C O N NEC TI ON, A F C C H AL LE NGE S, S P E C I A L F O R T H E W E B

Old Trick, New Victims: The Rise of Money

Mules During the Pandemic
AUGUST 28, 2020

Following the coronavirus outbreak, mandated lockdowns were implemented that led
millions of people to stay home. The financial industry has seen less money laundering
cases and fines from regulators because COVID-19 completely disrupted the demand of
illicit drug trafficking and successive money laundering measures. During these months
of lockdown, millions have been left jobless and have consequentially run out of savings.
For substantially marginalized people no work means no pay, so continuing social
distancing is nearly impossible. Businesses have eliminated jobs as demand for
nonessential goods and services has drastically reduced. Thus, an increase in job cuts and
subsequent unemployment can lead to a growth in unprecedented criminal activities.

Due to the forced lockdowns, banks have taken measures to protect their staff and
clients. Many banks have limited the hours of their branches and reduced staff in their
offices. Because these emergency restrictions have limited access to traditional banking
channels, banks are also pushing customers to avoid visiting a branch or an ATM. Many
banks now must modernize their traditional service channels and adopt digitization via
mobile, internet banking or other contactless technologies.
Due to deglobalization and reduced international trade activity, international money
laundering slowed down at the beginning of the pandemic. Dirty money piled up and
could not enter the financial system because of decreased financial activity overall,
which would have raised suspicions to banks and law enforcement agencies. But as
lockdown measures have eased and as criminals have adapted, money laundering
activities are likely to return but in different forms that will exploit financial insecurity,
unemployment and other anxieties. Whilst businesses are eliminating jobs, money
launderers seem to have opened employment opportunities for people in need,
specifically money mule schemes. The FBI, the Financial Action Task Force (FATF), and
Interpol have all recently warned financial institutions (FIs) about money mule schemes
and other COVID-19 fraud.

Money Mule―The Unusual Suspect

A money mule refers to a person who knowingly or unknowingly transfers illegally

acquired money for someone else through a courier or banking channel. For instance, a
launderer might send a person hard cash to deposit into a bank and will eventually ask
the mule to transfer that cash into a different account. In return, the launderer offers
some percentage of the money transferred. Teenaged students have deliberately
facilitated illegal money as it is perceived as a lesser crime and not a punishable offense.
But oftentimes criminals do not disclose that the money is dirty and create a compelling
story, that way a person in financial need views this as a harmless, profitable
opportunity. Money launderers are skilled at acting and social engineering, leaving no
stone unturned to groom victims into becoming partners in crime.

Money Mule Methods, Trends and Typologies

During this time, moving ill-gotten money around may not be easy for a money launderer
as unaffected financial behavior during the pandemic might attract the attention of
banks and law enforcement agencies. Therefore, criminals have been actively seeking
victims beginning with a friendly request, sometimes in exchange for money. But money
launderers are now adopting advanced methodologies and technological means to
recruit money mules. The following are the most widely seen money mule typologies and
trends of the COVID-19 pandemic:

1. Requests and offers made to close friends, relatives and acquaintances via social
media apps (e.g., Facebook, WhatsApp, Viber) to do a quick task and earn some
money
2. Seemingly legitimate job openings that target groups that were recently laid off
3. Requests to overseas/local students or recent immigrants to receive and transfer
money to different accounts and in return receive a percentage to support
themselves and their extended families abroad
 4. What appears to be legitimate freelancing job opportunities from
local/international impersonated employers who eventually ask employees to do
wire transfers to multiple accounts
5. Part-time job offers to work as a local representative or agent of a front
company/shell firm responsible for financial transaction facilitation
6. Urgent wire transfer requests for someone in financial need due to deteriorated
health conditions caused by COVID-19
7. Work from home opportunities that require opening new bank accounts or
business transactions to be performed through personal accounts
8. Opportunities to work as a money transfer agent in exchange for
commissions/bonuses on the number of funds routed through banking channels
or traditional mobile financial services popular in developing countries such as
Bangladesh and India
9. Takeovers of banking accounts or purchases of bank details in exchange for cash
from unemployed foreign students and workers
10. Small and medium enterprise owners struggling financially to revive business
receiving commissions/hard cash loans in exchange for transferring money from
business accounts under the reporting threshold

AML and KYC Compliance Challenges

Every day, thousands of people open bank accounts, and millions of transactions are
performed through ATMs or online. Thus, banks have regulatory obligations to monitor
these transactions and apply know your customer (KYC) procedures. But there is no one-
size-fits-all solution for solving the money mule crisis. FIs need to assess vulnerabilities in
exposed areas, increase awareness, reassess and develop a compliance strategy to
minimize the impact during the pandemic.

Asian countries and regulators have adopted FATF standards and supervisory
frameworks in the early 2000s. However, compliance with these standards across Asia is
uneven and generally remains moderate to low. Having perceived the vulnerability and
risk level in this region, many Asian countries have made considerable progress on AML
and counter-terrorist financing over the past years. Nonetheless, significant weaknesses
remain. Most AML experts working in the field lack real pandemic or skyrocketing
unemployment experience to understand money mule behavioral profiling completely.
For instance, nonessential business and service professions should be deviating their
prepandemic transactions and revenues. Any exception should be manually triggered
and investigated because transaction monitoring software will not generate an alert for
accounts that are still performing as usual or below the threshold. AML professionals and
compliance officers should rethink and redesign the AML monitoring system since the
traditional behavioral-based monitoring system keeps FIs at a disadvantage during a
pandemic.
Closing Remarks

COVID-19 has led to skyrocketing unemployment, hunger, deglobalization and inflation,

leading to the rise in money mule schemes and other financial fraud. Victimizing people
to use their bank account or conducting financial transactions for someone else not only
endangers FIs but also creates severe economic impacts. Banks with weak preventative
controls and slow responses from law enforcement agencies can negatively affect the
stability of FIs. An increasing number of money mule activities appear to violate the
public trust in the transparent operation of FIs. Such activities can harm the soundness
of a country’s financial system and overall reputation. Regulators, governments and FIs
should all increase awareness to stop money mule schemes and
preventative/remediation controls must be implemented in each FI.

Mohammad Rezaul Karim, CAMS, CDD analyst, HSBC Bangladesh

MS. Rucsar Jabin, lecturer of marketing, University of Dhaka, Bangladesh